In October 2020, new rules were introduced requiring all UK trusts (subject to a few limited exceptions) and some non-UK trusts to be registered with HMRC via the Trust Registration Service (“TRS”). Previously, only trusts with certain UK tax liabilities or a business relationship with a UK service provider needed to be registered.

Do I need to register?

You should assume that a trust will need to be registered unless you establish otherwise. Most trusts now need to be registered and only a limited number of trusts are excluded from the requirement to register.

Trusts that do not need to be registered include but are not limited to:

  • trusts holding money or assets of a UK registered pension scheme;
  • trusts holding life or retirement policies providing they only pay out on death, terminal or critical illness or permanent disablement, or to meet healthcare costs;
  • trusts holding insurance policy benefits received after death (as long as the benefits are paid out from the trust within 2 years of the death);
  • pilot trusts set up before 6th October 2020 holding no more than £100;
  • co-ownership trusts set up to hold jointly owned assets for two or more people (provided the legal and beneficial owners are the same people), for example where a property is held in more than one name;
  • will trusts (provided they only hold the estate assets for up to two years after the person’s death, from which point they will require registration); and
  • charitable trusts.

Any trust which would usually be excepted will become registrable if it has a UK tax liability other than the charitable trusts.

Trusts that you may not realise need to be registered include many common types of trust, such as discretionary trusts, immediate post-death interest trusts and bare trusts, although there are a number of exclusions which may apply to some common bare trust arrangements, such as opening a bank account for a child, or a married couple owning distinct shares in a property (for example a 60/40 split in ownership).

What are the deadlines?

Non-taxable trusts

Non-taxable trusts that were created on or before 6th October 2020 must be registered by 1st September 2022.

Non-taxable trusts that were created after 6th October 2020 must be registered within 90 days of creation or becoming liable for tax, or on or before 1st September 2022 (whichever is later).

Taxable trusts

Taxable trusts created on or after 6th April 2021 must be registered within 90 days of the trust becoming liable for tax or on or before 1st September 2022 (whichever is later).

Taxable trusts that were created before 6th April 2021

Trusts that are liable for Income Tax or Capital Gains Tax (CGT) for the first time must be registered on or before 5th October in the tax year after the one in which the trust starts to receive any income or has capital gains, and becomes liable for Income Tax or CGT.

Trusts that have been liable for Income Tax or CGT before must be registered by 31st January in the tax year after the one in which the trust becomes liable for Income Tax / CGT.

Trusts that are liable for other taxes such as Stamp Duty Land Tax or Stamp Duty Reserve Tax must be registered by 31st January in the tax year after the one in which the trust has any other tax liability, such as Inheritance Tax.

If a trust is liable for more than one tax and both deadlines could apply, it must be registered by the earlier of the deadlines.

What information do I need?

For all trusts that need to be registered, you will need:

  • the name of the trust
  • the date the trust was created
  • to say if the trust is an express trust or not
  • details about whether a non-UK trust has a business relationship in the UK
  • details about any UK land or property the trust has purchased
  • details of the lead trustee and other trustees
  • details of beneficiaries
  • details of any deceased settlors
  • details of any other individuals/organisations involved in the trust

Where a trust is taxable, extra information may be needed, including details of any shares, partnership interest, business details and details of the trust assets.

The actual registration of the trust should be relatively straightforward (albeit the online TRS process is not entirely intuitive). The tricky part is identifying whether a trust needs to be registered and the relevant deadline. Given the widening in scope of the TRS, you should seek advice from your solicitor or accountant without delay to ensure you are not caught out.